Bulletin
Investor Alert
×

Earnings Outlook Archives | Email alerts

July 23, 2019, 7:27 a.m. EDT

AT&T earnings: Expect another quarter of big video losses

Also look for information about forthcoming streaming service

new
Watchlist Relevance
LEARN MORE

Want to see how this story relates to your watchlist?

Just add items to create a watchlist now:

  • X
    AT&T Inc. (T)
  • X
    S&P 500 Index (SPX)
  • X
    International Business Machines Corp. (IBM)

or Cancel Already have a watchlist? Log In

By Emily Bary


Getty Images
AT&T’s deal for Time Warner closed a year ago.

As approval for T-Mobile US Inc.’s deal with Sprint Corp. looms over the wireless industry, fellow carrier AT&T Inc. /zigman2/quotes/203165245/composite T -1.61%  will show of the impact of its own mega-deal when the company reports second-quarter results next Wednesday before the opening bell.

What to expect

Earnings: Analysts surveyed by FactSet project that AT&T earned 89 cents a share on an adjusted basis, down from 91 cents a year earlier. According to Estimize, which crowdsources projections from hedge funds, academics and others, the average estimate calls for 91 cents in EPS.

Revenue: The FactSet and the Estimize consensus models $44.9 billion in June-quarter revenue for AT&T. A year ago, AT&T posted $39 billion in revenue just before finalizing its acquisition of Time Warner.

Stock movement : AT&T shares have fallen following the company’s past five earnings reports. The stock has gained 17% so far this year, while the S&P 500 /zigman2/quotes/210599714/realtime SPX -2.59%   has risen 19%. Of the 28 analysts surveyed by FactSet who cover AT&T’s stock, 14 have buy ratings, 12 have hold ratings, and two have sell ratings. The average price target is $33.96, 1.6% above current levels.

What else to watch for

As AT&T prepares for the 5G wave, the company has struck arrangements with several big cloud players in recent days. AT&T announced that it would be using International Business Machines Corp.’s /zigman2/quotes/203856914/composite IBM -3.54%  technology to “modernize” its AT&T Business Solutions internal software. The company also plans to work with Microsoft Corp. /zigman2/quotes/207732364/composite MSFT -3.19%  on a “multiyear alliance” focused on cloud, artificial-intelligence and 5G efforts.

Read: 5 things to know about Sprint/T-Mobile deal

Look for management to comment on the progress of its 5G efforts as well as the pending merger between T-Mobile /zigman2/quotes/204659678/composite TMUS -1.68% and Sprint /zigman2/quotes/208685669/composite S -1.89%  . The deal was thought to be beneficial to existing wireless players because it would reduce the number of national carriers to three, giving all more pricing power, but regulators are reportedly interested in seeing Dish Network Corp. /zigman2/quotes/207505872/composite DISH -2.14%  step in and become the fourth carrier using assets that Sprint would be forced to divest.

Don’t miss: Dish is in a ‘win-win’ situation even if deal between T-Mobile and Sprint approved, says analyst

Outside of 5G, AT&T will be trying to rebound from “a disastrous -661,000 video loss last quarter that almost single handily was responsible for the 4.3% sell-off,” according to Cowen & Co. analyst Colby Synesael. He expects that the company lost 800,000 video subscribers in the second quarter but that the metric will have less of an impact on AT&T’s earnings this time around.

See more: AT&T can’t escape a crumbling core business

Synesael rates the stock at outperform with a $34 target price.

One dilemma for AT&T with its DirecTV business concerns “Sunday Ticket,” a programming option that lets viewers watch out-of-market National Football League games. “Over the course of the next six to 12 months, AT&T could have the opportunity to address one of the major cost drivers at DirecTV if the NFL chooses to use its option to renegotiate Sunday Ticket this year,” wrote Barclays analyst Kannan Venkateshwar, who rates the stock at equal weight. He said the best option for AT&T would be to drop “Sunday Ticket” and try to pick up “Monday Night Football” instead.

AT&T executives might also speak about the company’s role in the evolving streaming landscape, after announcing plans to launch HBO Max, a new service, next spring. “While we knew this was coming, this represents a significant milestone as AT&T is formally putting its direct-to-consumer stake in the ground,” wrote Wells Fargo analyst Jennifer Fritzsche, who rates the stock at market perform. The company gained attention for the move because it plans to claw back “Friends,” the popular series currently licensed to Netflix Inc. /zigman2/quotes/202353025/composite NFLX -1.85% , to serve as a cornerstone of its new service.

/zigman2/quotes/203165245/composite
US : U.S.: NYSE
$ 34.82
-0.57 -1.61%
Volume: 33.86M
Aug. 23, 2019 6:30p
P/E Ratio
14.63
Dividend Yield
5.86%
Market Cap
$254.43 billion
Rev. per Employee
$637,332
loading...
/zigman2/quotes/210599714/realtime
US : S&P US
2,847.11
-75.84 -2.59%
Volume: 2.35B
Aug. 23, 2019 5:10p
loading...
/zigman2/quotes/203856914/composite
US : U.S.: NYSE
$ 129.57
-4.75 -3.54%
Volume: 4.82M
Aug. 23, 2019 6:30p
P/E Ratio
13.40
Dividend Yield
5.00%
Market Cap
$114.78 billion
Rev. per Employee
$208,845
loading...
/zigman2/quotes/207732364/composite
US : U.S.: Nasdaq
$ 133.39
-4.39 -3.19%
Volume: 38.52M
Aug. 23, 2019 4:15p
P/E Ratio
26.31
Dividend Yield
1.38%
Market Cap
$1018.49 billion
Rev. per Employee
$902,473
loading...
/zigman2/quotes/204659678/composite
US : U.S.: Nasdaq
$ 76.48
-1.31 -1.68%
Volume: 2.89M
Aug. 23, 2019 4:00p
P/E Ratio
19.98
Dividend Yield
N/A
Market Cap
$65.35 billion
Rev. per Employee
$832,885
loading...
/zigman2/quotes/208685669/composite
US : U.S.: NYSE
$ 6.74
-0.13 -1.89%
Volume: 7.36M
Aug. 23, 2019 6:30p
P/E Ratio
N/A
Dividend Yield
N/A
Market Cap
$27.59 billion
Rev. per Employee
$1.11M
loading...
/zigman2/quotes/207505872/composite
US : U.S.: Nasdaq
$ 31.04
-0.68 -2.14%
Volume: 2.84M
Aug. 23, 2019 4:00p
P/E Ratio
11.45
Dividend Yield
N/A
Market Cap
$14.59 billion
Rev. per Employee
$851,331
loading...
/zigman2/quotes/202353025/composite
US : U.S.: Nasdaq
$ 291.44
-5.49 -1.85%
Volume: 6.33M
Aug. 23, 2019 4:00p
P/E Ratio
114.29
Dividend Yield
N/A
Market Cap
$127.60 billion
Rev. per Employee
$2.22M
loading...

Emily Bary is a MarketWatch reporter based in New York.

Get news alerts on AT&T Inc. — or create your own.
This Story has 0 Comments
Be the first to comment
More News In
Industries

Story Conversation

Commenting FAQs »
Link to MarketWatch's Slice.